Woolies’ worker pay disgrace

WOOLWORTHS cleaning contractors in Tasmania were paid as little as $7 an hour, according to an investigation by the workplace cop which has uncovered "rampant exploitation" in the sector.

An inquiry by the Fair Work Ombudsman, commenced in 2014, found cleaners at 90 per cent of Woolworths' 31 Tasmanian sites were not complying with workplace laws, with the supermarket accused of failing to properly monitor its contractors.

"Our inquiry found deficiencies in Woolworths' governance arrangements with regard to its procurement and oversight of cleaning contracts, resulting in serious exploitation occurring at multiple levels of its cleaning supply chain," Fair Work Ombudsman Natalie James said in a statement on Wednesday.

"We uncovered breaches across 90 per cent of Woolworths' Tasmanian sites, including cases of contractors paying cleaners as little as $7 per hour for training and $14 per hour for work - well below their legal entitlements."

It is understood that none of the cleaning contractors identified in the report still work for Woolworths, and that the supermarket has introduced mandatory third-party audits for all cleaning head contractors in the past three years.

The FWO said as a result of the inquiry it had so far identified more than $64,000 in underpayments with $21,000 now repaid, initiated two litigations, and referred three contractors to the Australian Taxation Office concerning cash payments and misleading or false tax declarations.

It said investigations into a number of businesses that supply cleaning services to Woolworths in Tasmania were continuing. Woolworths was the focus of the inquiry because it was the only one of the three supermarkets in the state to outsource its day-to-day cleaning operations.

"Overall, record-keeping by contractors engaged at Woolworths' sites was abysmal," Ms James said.

"At 84 per cent of sites, workplace records were inaccurate or not kept at all. The impact of record keeping failings is exacerbated by the use of cash payments which, while lawful, make it difficult to determine with any certainty the extent of underpayment of wages by the contractors.

The inquiry found that while the cleaning performance of the contractors was regularly checked and scored by Woolworths, the supermarket's approach to procurement and oversight of its cleaning contracts contributed to a "culture of noncompliance" in its supply chain.

Woolworths' agreements only allowed for one level of subcontracting, but the inquiry found Woolworths failed to regularly check this requirement was being followed.

It also found Woolworths failed to monitor its contractors to ensure policies around identification cards, use of visitor books and auditing were being followed, exposing cleaners to potential work health and safety risks and exploitation.

"Woolworths should have been putting the same effort into monitoring its contractors' compliance with workplace laws as it did into scrutinising the cleanliness of their stores," Ms James said.

"It is not enough for businesses to simply have governance systems in place if they do not follow up to check that contractors within their networks are complying with those systems.

"Businesses need to step up and be active in their responsibility to ensure that workers in their supply chains are being paid appropriately and treated fairly."

The inquiry looked into contracting arrangements for cleaners at all Woolworths' Tasmanian sites, as well as seven Coles sites and 17 IGA sites.

Cleaning workers, who often spoke limited English, told the inquiry they were often not given enough time to complete physically demanding tasks to the standard required.

In one "alarming" case, referred to WorkSafe Tasmania, the inquiry heard how cleaners were locked in a store overnight to complete a strip and polish and couldn't leave until the duty manager arrived the next day.

While the store was not one of the three involved in the inquiry, the case involved a common contractor used by Woolworths. "We see too many cases of vulnerable workers engaged in low-skilled work in supply chains of major companies being exploited," Ms James said.

The Ombudsman has recommended Woolworths expand its Proactive Compliance Deed, entered into last year in the wake of similar abuses in its trolley collection network, to its cleaning supply chain. It has also called on Woolworths, Coles and IGA to become members of the industry-led Cleaning Accountability Framework.

"While we acknowledge that Woolworths has since taken steps to improve compliance within its labour supply chain, it is clear from our findings that at the time of the Inquiry a culture of noncompliance was prevalent amongst contractors on its sites," Ms James said.

Woolworths has been contacted for comment.

A Woolworths spokesman said the supermarket would "continue to work closely with the Fair Work Ombudsman as we incorporate enhanced management of our cleaning contractors throughout Australia".

"We're also committed to paying cleaners if they're found to be underpaid for cleaning services provided to Woolworths, and where the relevant subcontractor employing entity fails to rectify the underpayments," he said.

"Cleaners are an integral part of our store teams, providing an essential service across Woolworths' sites, not just in Tasmania, but nationwide. We'd like to thank them for their continued hard work and support of our store teams."

Woolworths will roll out a number of new processes for cleaning services across the country this year, including the requirement that all contractors use a third-party payroll system, an increase in the number of audits each year, and an ongoing training program to ensure head contractors understand their requirements under the Fair Work Act and all employees understand their rights.